Meeka Metals Ltd (ASX: MEK) recently hosted a site visit for analysts at its Murchison gold project, and the team from Morgans has come away impressed.
Morgans has issued a new research note into the company, with a very bullish share price target, which I'll get to shortly.
First, let's learn a bit more about the company.
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A tough quarter for Meeka Metals
Meeka is mining gold at its Murchison project, and produced 6,424 ounces in the June quarter, up from 6,083 ounces in the March quarter.
The company is also preparing to start a second underground mine at its Turnberry project, with the development of the portal down to the deposit expected to start in September.
Meeka's cash on hand reduced from $50 million to $38 million during the June quarter, but the company said this was expected to build in the current quarter on increased production and reduced costs.
The company is debt free.
Meeka Managing Director Tim Davidson said regarding the result:
It was another frustrating quarter from a production perspective and while the result fell short of expectations, the drivers are well understood and the corrective path is clear. Production is expected to improve in the September 2026 quarter as the operation transitions away from its reliance on open pit ore. Higher-grade underground production is ramping up and will make up an increasing proportion of the mill blend, lifting both head grade and recovered ounces. Cash is expected to grow through the September 2026 quarter on the back of this stronger gold production, as the higher-margin underground material flows through to the bottom line.
Meeka also recently announced exploration success, with drilling below its Turnberry ore reserve intersecting grades including 52.3m at 3 grams per tonne of gold from a depth of 474.1m.
The company said the results "highlight the potential for significant extension and growth to the current Turnberry Mineral Resource''.
ASX gold producer's shares looking cheap
Morgans said in its research note that the company's decision to conclude open-pit mining was logical, and they expected improvements in both unit economics and cash outflows to come from that.
The broker added:
We rate Meeka a BUY with a target price of 31 cents per share. Meeka is rapidly ramping up the Murchison Gold Project (MGP), with production underway from Andy Well underground, a debt-free balance sheet and no hedging. The MGP tenure is a proven mining hub, and we expect further high-grade exploration success and resource conversion to unlock additional value as Meeka ramps up Andy Well and brings Turnberry online.
Meeka shares are currently changing hands for 10.75 cents, valuing the company at $328.3 million.
